13 comments:

There's a lot to be said about a VAT, mostly "No," but to get a real feeling for its impact there's no substitute for a few days in Europe. It came home to me one evening in Galway when I stepped into a shop to buy a Bic lighter and stepped out about $4 poorer.

I wouldn't mind a national sales tax if the 16th Amendment were repealed and replaced with an amendment banning income taxes. Bearing in mind that 50% of Americans pay no federal income tax at all, a sales tax would "bring them back into the fold" with all of us other tax-paying, and tax-hating, citizens. Folks who work in the so-called "cash economy" would no longer escape, either. It would make more anti-tax voters. No annual returns to fill out.

As unlikely economist Frank Zappa pointed out, replacing the National Income Tax with a National Sales Tax would make such disparate groups as churches, drug dealers, and defense contractors into stars of the federal tax base. What's not to like about that? (Assuming we take a need for federal taxes as arguendo.)

Ignatius implies a VAT would have prevented Greece from its current problems? Uh, search "GREECE+VAT" shows Greece has a VAT. As of 2005 at 19 percent.

And we already have the equivalent [no, not income tax, goods taxes], which of course would not be done away with. Now, my State has a sales tax - but it does not apply to food. But of the dollar-and-a-half a loaf of bread costs at the supermarket, about a dollar-thirty or more is taxes, fees, etc. that applied every time the ingredients changed hands or form.

My guess is that this guy never took on an accounting task more complicated than installing a piece of software to balance his checkbook. That's okay, since the problem can be simplified so even a D. Ignoramus can understand.

Even if we set aside for a moment the implications of adding more burden to the already tremendously complex task of business accounting, there is a limit to what the tax pigs can consume. When taxes exceed a certain point, I have to eliminate expenses:

1. If I stop buying clothes or eating, I'm dead and therefore no longer a taxpayer.

2. If I ditch my car, then I need a job within walking distance. Since I won't be able to travel or haul things, this will undoubtedly be a lower-paying job.

3. Either from the income loss above, or alternatively ditching the house, my tax contribution will be significantly lower because I'm either paying less income tax, or less property tax--likely both.

4. Doing either of the above will make me a high-risk borrower, which means I'm going to be stuck in the situation for a decade or more (provided that businesses are still offering work), and no sanely-managed bank will ever make a loan to me, except in small amounts, with high interest rates and with collateral.

5. Since my credit and mobility will be severely limited, my paltry disposable income will only help small, local businesses.

6. Since I won't be alone in this predicament, thousands of other businesses will suddenly lose sales, pay less in taxes, and fire people. There will be a chain reaction of financial failure across the country.

7. This has already happened to minority of the population, some of whom were deadbeats anyway, and this small blip has thrown every level of government into budget deficit. I'll type this slowly for the D. Ignoramuses of the nation: this means less tax is actually being collected.

We're past of the point of diminishing returns. Right now we're being taxed to pay for the tax owed on property backed by credit accounts which no one will service. The "solution" is therefore to collect tax, to pay the tax that is being collected to pay the tax that is owed on property backed by credit accounts which no one will service. Adding more either does nothing, or has a negative effect. "I keep cutting this board, but it's not getting any longer."

"I saw to what extent the people among whom I lived could be trusted as good neighbors and friends; that their friendship was for summer weather only; that they did not greatly propose to do right; that they were a distinct race from me by their prejudices and superstitions."